Sunday, 24 April 2011

Prof. Bakshi's 8 vantage points to look at a stock

As usual, great post from Prof.Bakshi. In this he goes through the eight ways of looking at a company and provides nuggets of wisdom while looking at the financial statements from the company.

Thursday, 21 April 2011

Yes Bank - Stellar Performance & Stupidity rolled into one!!

First the stellar performance:

Highlights for Full Year ended Mar 31, 2011 (FY11)
  • Net Profit up 52.2% to 727.1 cr (477.7 cr in FY10)
  • Net Interest Income up 58.2% to 1,246.9 cr (788.0 cr in FY10)
  • Operating Profit up 37.9% to 1,190.4 cr (863.3 cr in FY10)
  • Net Interest Margin at 2.9% 
  • Return on Average Assets-RoA of 1.5%; RoA has been at or above 1.5% over the past 3 years
  • Return on Equity-RoE of 21.1%; has been 20% or above over past 3 years
  • Basic EPS of  21.1 and Diluted EPS of 20.2
Other Key Highlights as at Mar 31, 2011
  • Advances up 54.8%
  • Deposits up 71.4%
  • Total Assets up 62.2%
  • Basel II Capital Adequacy Ratio of 16.5% (Tier I – 9 .7%)
  • Gross NPA at 0.23% of Gross Advances 
  • Net NPA at 0.03% of Net Advances 
  • Book value per share of 109.3 (91.0 as at Mar 31, 2010)
Now, the stupidity:

Yes Bank made 2 announcements - 1) dividend of 2.5/share (approximately 85 crores) and 2) it has plans to raise up to USD 500 million (about Rs 2,000 crore) during the current fiscal to fund business growth . 

These two announcements, to my mind, are contradictory in nature. Why does a company earning 20% RoE growing at over 40% need to pay a dividend? Specially, if it needs to raise equity capital in the near future. Beats me.

Bottomline: Great bank, keep buying on dips.

Saturday, 9 April 2011

Book Review: Warren Buffet Portfolio by Robert Hagstrom

This book came very highly recommended to me. Hagstrom's more popular book The Warren Buffet Way was the first book related to investments that I had read. I was eager to read this to understand the approach for creating a portfolio. However, this book was a big let down. Hagstrom, to my mind, has tried to rehash some very popular and easily accessible material from Buffet's shareholders, Poor Charlie's Almanac and other such sources and put together a book. There is nothing is this that a reader can learn from that he won't get from reading the Buffet's letter to shareholders and books on Munger. 

The idea that is propagated throughout the book is to build a focused portfolio of not more than 10-15 stocks. Have a holding period of not less than 5 years. Increase your knowledge about every company you hold. Learn about them, their industry and competitors. 

In a nutshell, a book that has no new insights and repeats very well-known investment ideas and themes. Better to avoid.

Monday, 4 April 2011

Book Review: Investment Gurus by Peter Tanous

I just completed reading Peter Tanous' Investment Gurus. This book has been written on the lines of the Market Wizards series by Jack Schwager.That is, it is a collection of interviews with famous money managers. Added to those are a list of academicians. The list of interviewees are a very good collection of money managers. It includes people like Peter Lynch, Mario Gabelli, William Sharpe, Richard Driehaus and Eugene Fama.

The focus of the book is on finding out the method that each use to consistently beat the markets and to understand if the efficient market theory actually has any basis in reality.

This is a good book to read if you want to flip through the investment strategies of some very well-known and outperforming managers. If you want to have in-depth understanding of any theory, then this is not the book for you.

Learning from Security Analysis - Part 1

I have started re-reading Security Analysis, 6th edition, (also will add on things from the 5th ed). I have been putting it on the backburn...